Situation: A company offers a product combined with a service. Small companies can’t afford the combined price, but don’t need the full functionality of the combined product plus service. An option is to create an offering on a per-seat basis. In this option, how do you price seat utilization? How do you price a product and service?
Advice from the CEOs:
Pricing needs to follow value. For large companies, functionality and seamless operation are key. Small companies have different challenges – they have less money and don’t need all the features required by large companies. Configure a limited product for this market.
Don’t de-feature the product – create a different use / pricing model. Consider a model that prices based on the user company’s revenue, with periodic review of their revenue and fees paid. As they grow and increase utilization, they increase their ability to pay for, and their need for full utilization.
Use a cloud model and create a “pay per amount of use” option. Limit this offering to X number of users or X number of projects to create a different product from the full license option. While this will require monitoring, it will differentiate the partial license option from the full license option.
Develop an alternative to what is offered by the chief competitor and create an offering that this competitor can’t compete with.
Before making a final decision, institute a formal process for collecting ongoing feedback from customers. This will help to clarify alternatives going forward.
Situation: A company pays employees based on skill level. Raises are given as an employee learns additional skills. In some cases, when they give an employee a raise, productivity drops. The company has tried other approaches including bonus systems and profit sharing but did not find these effective. How do you effectively motivate hourly employees?
Advice from the CEOs:
Before trying a new motivation scheme, find out what matters to your employees. It may not be either bonuses or profit sharing.
Develop and send out a questionnaire listing different factors – revenue sharing, bonuses, creativity, doing quality work – ask what matters to you? Get their feedback.
People work for respect – many studies have shown that as long as the payment offered is fair, salary is secondary.
Hire an advocate for your employees – a part-time HR person. An important role for this individual will be to determine what motivates employees, what they want from their jobs, and how improvements in both processes and the working environment can boost productivity.
What is the real issue: employee motivation, employee productivity or cost reduction?
If material waste is more expensive that labor – create metrics and rewards to reduce waste.
At companies that use the Toyota Production System employees receive points for process improvements. At the end of the year they receive a cash payout based on the points earned during the year.
Employees are rewarded publicly. The incentives are cash, recognition and respect. These companies find that recognition and respect trumps cash.
Depending upon your cost structure, it may be more productive to focus on scrap reduction. Bring in someone with experience who can find the sources of scrap. The effort will pay for itself rapidly.
During the hiring process, require educational attainment as evidence of the individual’s commitment.
Look for skills experience – machinist, etc. Match skills and experience to your needs. This will lead to faster learning curves and will help to reduce waste.
Situation: A small company has no formal human resources, pay scale or performance review systems. The CEO wants to create a structure to address these gaps, as well as to encourage employee feedback. How do you build an HR function for a company with under 20 employees?
Advice from the CEOs:
Many small companies outsource HR services. There are a number of firms who provide outsourced HR services, and through them much of the HR activity can be conducted online. Examples include ADP, Administaff, Express Employment Professionals and PayChex.
These systems cover all of the mechanics of HR, and help to assure that the company is in step with changing regulatory requirements.
There are also a host of individual consultants who put together HR systems for smaller companies. These are most easily found using locally-focused Internet searches.
Employees in small companies are used to wearing many functional hats. Hire or assign a manager to create an HR system and implement it once it is set-up. This person will be in charge of the personnel review schedule, changes to regulations and contact with outside HR resources.
One company’s HR Manager has a one hour conversation with the company’s lawyers once a year to make sure that the company is up to speed on any regulatory changes.
Hire a Director of Operations and include HR in this individual’s responsibilities. This person can research options for discussion by the leadership team. Empower them to bring in resources that will meet the company’s needs.
Situation: A company wants to upgrade its presence in social media to improve client interactions. Before engaging in this exercise, they are curious as to how others are successfully using social media as part of their overall marketing and client service strategies. From your experience, how do social media change client interactions?
Advice from the CEOs:
The Web and the emergence of social media have enabled a much broader range of communication and collaboration options with clients, vendors, and others in any marketplace. In contrast to classic “push marketing” the Web and social media enable interactive marketing tailored to the individual needs, likes and dislikes of individual customers.
One of the most important changes is the opportunity for customers to post feedback and opinions about a company’s products and services. In the new reality, if you don’t have a place where customers can post feedback – both positive and negative – they’ll find somewhere else to post it.
Web 2.0 is generally defined as interactive, dynamic web sites that get updated frequently. From a consumer standpoint we think of eBay and Amazon.com. However, this also includes web-enabled collaborations between company members or company and client, for example collaborative project management.
Using cameras and built-in microphones that now usually come built-in with new monitors and laptops you can communicate less expensively and with higher quality than with traditional telecommunications. Web-enabled team meetings are virtually the same as being in the same room.
Through your web site you can provide digital video content at different levels of sophistication to potential and, with password protection, verified customers.
An underutilized resource which is truly win-win is available through local colleges and universities that can provide state-of-the-art expertise in web enabled communications through student projects in internships.
Special thanks to Dean Lane of the Office of the CIO (http://www.oocio.com) for his insight and input to this discussion.
Situation: A company is about to launch a Beta version of their web-based software. The CEO strives for perfection. What is sufficient for launch, and can the company tolerate imperfections in Beta version? When is “good enough” enough?
Advice from the CEOs:
Many successful software companies – think Microsoft – have realized that finishing the last 10-20% of a new release can be as expensive and time consuming as the first 80-90%. The challenges are often greater and it’s difficult to prioritize the final pieces. So they release when the software is 80-90% complete, prioritize the final pieces based on user feedback, and focus on quick response to user feedback.
You really have no idea how users will experience a new web-based program until you hear it from them. They will tell you what does and does not need to be fixed. They may even be able to help you fix it! Craig’s list stinks from a pure GUI perspective, but is highly popular and successful.
Get the Beta program out ASAP. What you perceive as imperfections may not appear as problems to young Beta users, and may in a way add a quirky appeal to the user experience.
Find a customer or group of customers who will pay for the program. Only this proves its actual worth. There can be conditions for a Beta release and discounts, but if nobody is willing to pay, where is the value?
Consider releasing your Beta version in a college campus environment and invite both participation and feedback. College students are very web-savvy, more tolerant of Beta programs, and crave the opportunity to contribute.
As an additional bonus, when you are ready to launch, college students are great at helping you generate buzz and early adoption because they talk to so many of their friends from both college and high school.
Interview with Henry Chen, PhD, Founder & CEO, Cynovo
Situation: A company in a maturing market needs to gain customer feedback to guide product development. They want to optimize Alpha testing prior to investing in tooling. How do you assess product viability on a limited budget?
Advice from Henry Chen:
As the market for tablet devices matures, it is increasingly important to test mass market response to new product design prior to freezing product specs and investing in tooling. Our approach to vertically designed enterprise solutions focuses on four areas: going to the experts for guidance; monitoring the competition and market direction, investing heavily in prototypes, and leveraging speed to market.
Go to the experts; leverage their knowledge and understanding of the market to speed your own development efforts.
Get to know the market gurus who stay on top of the market and are knowledgeable about market direction. These are the influencers who blog, write and publicize new market innovations.
As a smaller company, the route to market in often through alliances. Senior staff at large companies are a valuable resource. One option is to work through large companies’ sales teams to identify senior product people and connect with them.
A good place to monitor market developments is at major trade shows. Events like the Consumer Electronics Show allow you to interact with a large number of experts and to monitor both what the large companies are introducing and their product direction.
Trade shows are unique situations because many experts attend. Some are speakers, and others simply attend to keep up to date with latest developments.
Use trade shows as an opportunity to gather a panel of experts to give you feedback on your design concepts. Experts like to be on top of the market and new developments and appreciate the opportunity to provide input on new products.
Leverage the opinion of younger leaders and experts. In the US and in China, the average entrepreneurial founder is young – often in their low 20s. They are not as cautious as older people who worry about failure. Successful young entrepreneurs are also potential investors.
Give experts time to think about your product. It may take a few hours or even days for them to “get” your new concept.
Invest in prototypes which have a similar look and feel as actual products, though they may lack full functionality. People like to hold a product, gauge the weight, look and feel of the controls, and to contrast different model options.
Large companies are often hindered by internal confidentiality rules. Smaller, more nimble companies may rely on speed to market to allay confidentiality concerns. This gives them the ability to gather more feedback prior to finalizing product design.
Interview with G.K. Sally Solis-Cohen, President, CEO Intronet
Situation: An early stage company is simultaneously undergoing geographic expansion and broadening its network to include new audiences. This mandates finding the right people to run the new opportunities while staying focused on existing operations. How do you stay focused on core operations while building new opportunities?
Advice from Sally Solis-Cohen:
First and foremost, understand your own limitations. Know what you can do, what you can’t, and delegate what you can’t do. This means choosing the right people to whom you can delegate important initiatives. As a start-up you have few people to whom you can delegate. Make sure that they see the opportunity as you do and have the skill and personality sets to handle their responsibilities. The choices that you make in selecting your core team will be critical to your success.
Make sure that your team talks back to you – your need their perspective and feedback, especially when their perspective differs from your own. Listen openly to their ideas. At the same time listen to your customers; they will keep you focused on your business and marketing plans. Focus more on listening, thinking and doing than speaking.
Have a very clear set of priorities and a to-do list. Focus on your A priorities. Delegate the rest. When you’re growing it doesn’t double your work, it quadruples it with travel and extra distractions.
Stay focused on your core value proposition. Keep reminding yourself why you started the business. Observe the validation that you receive from your customers and users. Live your value proposition.
If you are talking to nay-sayers, you’re talking to the wrong people. Surround yourself with positive people who are heading in the same direction that you are and who can present alternate points of view in a positive tone.
Situation: The Company is shifting focus from project-based to relationship-based client interactions –from a short to a long-term perspective. This is a challenge. How do you adapt employee behavior to a new strategic focus?
Assume the best intentions.
Everyone wants to do a good job. The challenge is making sure everyone knows what constitutes a good job.
Be clear on objectives, and why they are important. Be clear on the new roles.
This is most difficult when the shift is counter to a well-established company culture.
You have to have the right people.
Avoid smart people with no role, or a role for which they are ill-suited.
The organization IS the people. There must be absolute commitment to assigning the right talent on any job, and the right people to the right team.
Players must fit in terms of skill set and culture. The company is who, not what!
Focus efforts and objectives on the long-term vs. the short-term.
Paint the end state – the vision. Add tangible steps to guide people to the right path.
Don’t micromanage. Set direction and initial moves, but let staff blaze the path.
Provide feedback and recognition.
Negative feedback is always difficult, but best when delivered directly and quickly.
Recognize success and contributions both 1-on-1 and in all-hands meetings.
We hired an experienced manager with a strong track record. Initially this created discomfort; however discomfort was quickly resolved as this person produced positive impact.
We cited the wins in all-hands meetings to support the shift.
Make people feel that their opinions are heard, and their solutions.
Be clear on objectives and rationale. Assure that your perspective as leader is grounded in a credible reality that you can communicate to the team.
Conduct workshops which focus on the practical steps that will produce the desired result.
Listen to feedback from team members, and include what you hear in the agenda for future discussions. Involve the team in developing the solution. Delegate and recognize!
Situation: The CEO wants to build the team, identify leaders within the company, and develop managers. What are best practices to develop your staff?
Advice of the CEOs:
A great resource is “First Break All the Rules” by Marcus Buckingham. Among the key findings:
Great leaders are not the same as great managers. Good leaders are outgoing and goal-oriented whereas good managers are people-oriented.
Expecting good leaders to be good managers and vice versa is not effective. Only the exceptional individual exhibits both sets of talents.
The traditional business structure assumes that talented people will want to “move up” the organizational chart. The reality is that some people are very good at a particular level of responsibility, and are happiest with this responsibility.
How do to enhance your team’s leadership and management capabilities?
Evaluate your team for candidates who possess the qualities of leadership or management. Tailor your training to enhance the natural strengths of your candidates.
Draft agreed upon written responsibilities and performance objectives.
Regularly follow up and provide feedback.
Establish trial projects for new candidates that will allow them experience additional responsibility, and allow you to see how well they perform. Make the steps small at first. If they show talent, make successive steps more challenging.
Look at your organizational chart. Does it provide room for both leaders and managers? Does it provide room for the skilled role player who thrives in a particular role? If not, how will you fix it?